<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q


(MARK ONE)

     / X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
           EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2000

                                or

    /   / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934


                      COMMISSION FILE NUMBER 000-24289


                             CLICK2LEARN.COM, INC.
              (Exact name of registrant as specified in its chapter)


           DELAWARE                                     91-1276003
  (State or other jurisdiction of           (I.R.S. Employer Identification No.)
  incorporation or organization)

                    110-110TH AVENUE NE, BELLEVUE, WASHINGTON
            98004 (Address of principal executive offices) (Zip Code)


                                 (425) 462-0501
              (Registrant's telephone number, including area code)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes     X                  No
   -----------               -----------

The number of shares outstanding of the issuer's Common Stock, par value $0.01,
as of March 31, 2000 was 16,707,342 shares.




<PAGE>


                              CLICK2LEARN.COM, INC.

                                   FORM 10 -Q

                      FOR THE QUARTER ENDED MARCH 31, 2000

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

PART I - FINANCIAL INFORMATION                                                                           PAGE

<S>      <C>                                                                                             <C>

Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets as of March 31, 2000 and
         December 31, 1999                                                                                 3

         Condensed Consolidated Statements of Operations for the three months
         ended March 31, 2000 and 1999                                                                     4

         Condensed Consolidated Statements of Cash Flows for the three months
         ended March 31, 2000 and 1999                                                                     5

         Notes to Condensed Consolidated Financial Statements                                              6

Item 2.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations                                                                             9

Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                       17


PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                18

Item 2.  Changes in Securities and Use of Proceeds                                                        18

Item 3.  Defaults upon Senior Securities                                                                  18

Item 4.  Submission of Matters to a Vote of Securities Holders                                            18

Item 5.  Other Information                                                                                18

Item 6.  Exhibits and Reports on Form 8-K                                                                 18

SIGNATURES                                                                                                20

EXHIBIT INDEX                                                                                             21

</TABLE>


                                       2
<PAGE>


                              CLICK2LEARN.COM, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       March 31,          December 31,
                                                                         2000                1999
                                                                      -----------        --------------
                                     ASSETS
<S>                                                                    <C>                <C>
Current assets:
    Cash and cash equivalents                                          $  19,221          $  19,481
     Accounts receivable, net of allowance for returns and
        doubtful accounts of  $1,088 in 2000 and $945 in 1999             13,349             13,717
    Inventories                                                              207                203
    Prepaid royalties and licenses                                           194                 95
    Receivables from related companies                                        68                  9
    Other current assets                                                   2,124              2,272
                                                                      ----------         ----------
            Total current assets                                          35,163             35,777
 Property and equipment, net                                               2,562              2,583
 Goodwill and other intangible assets, net                                10,127             10,475
 Other assets                                                                473                571
                                                                      ----------         ----------
              Total assets                                             $  48,325          $  49,406
                                                                      ==========         ==========


                        LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                  $   1,933          $   2,146
     Accrued liabilities                                                   2,955              2,382
     Deferred revenue                                                      1,486              1,687
     Customer prepayments                                                    569                591
     Other current liabilities                                               956              1,153
                                                                      ----------         ----------
             Total current liabilities                                     7,899              7,959
Other noncurrent liabilities                                                 162                 92
                                                                      ----------         ----------
             Total liabilities                                             8,061              8,051
                                                                      ==========         ==========

Stockholders' equity:
     Preferred stock
     Common stock                                                            168                162
     Additional paid-in capital                                          219,819            217,521
     Accumulated deficit                                                (178,875)          (175,527)
     Deferred stock compensation                                            (464)              (484)
     Accumulated other comprehensive loss                                   (384)              (317)
                                                                      ----------         ----------
            Total stockholders' equity                                    40,264             41,355
                                                                      ----------         ----------
            Total liabilities and stockholders' equity                 $  48,325          $  49,406
                                                                      ==========         ==========

</TABLE>

      See accompanying notes to Condensed Consolidated Financial Statements



                                       3
<PAGE>


                              CLICK2LEARN.COM, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                                            Three months ended
                                                                                March 31,
                                                                      -----------------------------
                                                                          2000               1999
                                                                      ----------         ----------
<S>                                                                    <C>                <C>
Revenue:
Product revenue:
   Enterprise products                                                 $  3,722           $  2,736
   Other products                                                            70                418
                                                                      ----------         ----------
        Total product revenue                                             3,792              3,154
Enterprise services                                                       5,364              4,306
E-learning network                                                          727                  -
                                                                      ----------         ----------
         Total revenue                                                    9,883              7,460
                                                                      ----------         ----------

Cost of revenue:
Product revenue:
   Enterprise products                                                      240                178
   Other products                                                            28                136
                                                                      ----------         ----------
     Total cost of product revenue                                          268                314
Enterprise services                                                       3,902              3,277
E-learning network                                                          667                  -
                                                                      ----------         ----------
    Total cost of revenue                                                 4,837              3,591
                                                                      ----------         ----------

Gross margin                                                              5,046              3,869
                                                                      ----------         ----------

Operating expenses:
   Research and development                                               2,451              1,513
   Sales and marketing                                                    4,537              3,527
   General and administrative                                             1,448              1,256
   Amortization of goodwill                                                 236                219
                                                                      ----------         ----------
       Total operating expenses                                           8,672              6,515
                                                                      ----------         ----------
Loss from operations                                                     (3,626)            (2,646)
Other income, net                                                           277                240
                                                                      ----------         ----------
Net loss                                                               $ (3,349)          $ (2,406)
                                                                      =========         ==========

Net loss per share, basic and diluted                                  $  (0.20)          $  (0.17)
                                                                      =========         ==========
Weighted average common shares outstanding, basic and diluted            16,417             13,967
                                                                      =========         ==========

</TABLE>

      See accompanying notes to Condensed Consolidated Financial Statements


                                       4
<PAGE>


                              CLICK2LEARN.COM, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                              Three Months Ended
                                                                                                  March 31,
                                                                                      -------------------------------
                                                                                           2000               1999
                                                                                       ----------         ----------
<S>                                                                                    <C>                <C>
Cash flows from operating activities:
  Net loss                                                                             $ (3,349)          $ (2,406)
  Adjustments to reconcile net loss to net cash used in operating activities:
    Depreciation and amortization                                                           589                540
    Write-off property and equipment                                                          1                  -
    Stock compensation expense                                                               20                 46
    Changes in assets and liabilities:
      Accounts receivable                                                                   368                (69)
      Inventories                                                                            (4)                10
      Prepaid royalties and licenses                                                        (99)                17
      Receivables from related companies                                                    (59)               144
      Other current assets                                                                  148                148
      Accounts payable                                                                     (214)               (20)
      Accrued liabilities                                                                   574                316
      Deferred revenue                                                                     (200)              (673)
      Other current liabilities                                                            (218)              (252)
                                                                                         -------            -------
               Net cash used in operating activities                                     (2,443)            (2,198)
                                                                                         -------            -------

Cash flows from investing activities:
    Purchase of property and equipment                                                     (222)              (691)
    Sale of other assets                                                                     98                  -
                                                                                         -------            -------
               Net cash used in investing activities                                       (124)              (691)
                                                                                         -------            -------

Cash flows from financing activities:
    Proceeds (repayment) of notes payable                                                    71                (24)
    Proceeds from exercise of stock options and employee stock purchases                  2,303                100
                                                                                         -------            -------
               Net cash provided by financing activities                                  2,374                 76
                                                                                         -------            -------
    Effect of foreign exchange rate changes                                                 (67)               (49)
                                                                                         -------            -------
               Net decrease in cash and cash equivalents                                   (260)            (2,861)
Cash and cash equivalents at beginning of period                                         19,481             21,713
                                                                                         -------            -------
Cash and cash equivalents at end of period                                             $ 19,221           $ 18,852
                                                                                       ========           ========

</TABLE>


      See accompanying notes to Condensed Consolidated Financial Statements



                                       5

<PAGE>


                              CLICK2LEARN.COM, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2000 AND 1999

UNAUDITED INTERIM FINANCIAL INFORMATION

         The accompanying unaudited condensed consolidated financial statements
of click2learn.com, inc. ("click2learn") include the accounts of click2learn and
its wholly owned subsidiaries. All significant intercompany transactions have
been eliminated in consolidation. These statements reflect all normal recurring
adjustments which are, in the opinion of management, necessary for a fair
presentation of the financial position and results of operations for the periods
presented. These condensed consolidated financial statements and notes should be
read in conjunction with click2learn's audited consolidated financial statements
included in click2learn's Annual Report on Form 10-K for the fiscal year ended
December 31, 1999. Certain information and footnote disclosures normally
included in financial statements prepared in conformity with generally accepted
accounting principles have been condensed or omitted pursuant to the rules and
regulations of the Securities and Exchange Commission. Interim results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of the operating results for the full fiscal year. Factors that may
affect such operating results, include, but are not limited to, those discussed
in "FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS".

NET LOSS PER SHARE

         Basic earnings per share is computed by dividing the net loss by the
weighted average number of common shares outstanding during the period. Diluted
earnings per share is computed by dividing the net loss by the weighted average
number of common and dilutive common equivalent shares outstanding during the
period. As click2learn had a net loss attributable to common stockholders in
each of the periods presented, basic and diluted net loss per share is the same.

         Excluded from the computation of diluted earnings per share for the
three months ended March 31, 2000 are options to acquire approximately 4,661,455
shares of common stock with a weighted average share price of $6.87 and warrants
to acquire 1,426,313 shares of common stock with an weighted average share price
of $8.61, and for the three months ended March 31, 1999 are options to acquire
approximately 4,302,927 shares of common stock with a weighted average share
price of $4.97 because their effects would be anti-dilutive.



                                       6
<PAGE>


REVENUE RECOGNITION

         Click2learn recognizes revenue from product sales upon shipment
provided no significant obligations remain outstanding and collection of the
resulting receivable is probable. An allowance for product returns is provided
at the time of the sale. Revenue from technical support agreements is recognized
on a straight-line basis over the life of the contract.

         Click2learn has two types of professional service contracts: fixed
price and time and materials. On a fixed price contract, revenue is recognized
by applying the percentage of completion method of accounting which is based on
the ratio of costs incurred to the total estimated project cost. On the time and
materials contract, revenue is recognized as the services are performed.
Provisions for any estimated losses on uncompleted contracts are made in the
period in which such losses become evident.

         Revenue from the click2learn.com network includes site fees,
royalties, and content sales. Revenue is established by the specific
requirements of the customer agreements which have a length of one to three
years. Revenue for the site fees and content usage is recognized over the
length of the customer agreements. Royalty revenue is recognized as earned.

COMPREHENSIVE LOSS

         The following table sets forth the components of comprehensive loss for
the periods presented below:

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED
                                                              MARCH 31,
                                                     --------------------------
                                                        2000            1999
                                                     ----------      ----------
<S>                                                   <C>             <C>

Net loss                                              $(3,349)        $(2,406)
Foreign currency translation  adjustment                  (67)            (49)
                                                     ---------       ---------
Total comprehensive loss                              $(3,416)        $(2,455)
                                                     =========       =========
</TABLE>


NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
("Statement 133"). Statement 133 provides a comprehensive and consistent
standard for the recognition and measurement of derivatives and hedging
activities. Statement 133 is effective for fiscal years beginning after June
15, 2000. Click2learn does not expect the adoption of Statement 133 to have a
material impact on its consolidated financial statements.

         In December 1998, the AICPA issued Statement of Position 98-9,
MODIFICATION OF SOP 97-2, SOFTWARE REVENUE RECOGNITION, WITH RESPECT TO CERTAIN
TRANSACTIONS ("SOP 98-9") which amends certain elements of SOP 97-2 and is
effective for fiscal years beginning after March 15, 1999. The adoption of SOP
98-9 did not have a material effect on the click2learn's results of operations
or financial position.

         In December 1999, the United States Securities and Exchange Commission
(SEC) released Staff Accounting Bulletin No. 101, REVENUE RECOGNITION IN
FINANCIAL STATEMENTS ("SAB 101"), which click2learn must adopt by June 30,
2000.  SAB 101 provides guidance on revenue recognition and the SEC staff's
view on the application of accounting principles to selected revenue
recognition issues. The adoption of SAB 101 is not expected to have a material
effect on its consolidated financial statements.

         In March 2000, the FASB issued FASB Interpretation No. 44 ACCOUNTING
FOR CERTAIN TRANSACTIONS INVOLVING STOCK COMPENSATION, ("FIN No. 44").  FIN
No. 44 provides guidance for certain issues arising in the application of
Accounting Principals Board (APB) Opinion No. 25, "Accounting for Stock
Issued to Employees."  Among other issues, FIN No. 44 clarifies (a) the
definition of an employee for purposes of applying APB Option No. 25, (b) the
criteria for determining whether a plan qualifies as a noncompensatory plan,
(c) the accounting consequence of various modifications to the terms of a
previously fixed stock option or award, and (d) the accounting for an
exchange of stock compensation awards in a business combination.  FIN No. 44
is effective July 1, 2000 but certain conclusions in FIN No. 44 cover
specific events that occur after either December 15, 1998 or January 12,
2000. To the extent, FIN No. 44 covers events occuring during the period
after December 15, 1998 or January 12, 2000, but before the effective date of
July 1, 2000, the effects of applying FIN No. 44 are recognized on a
prospective basis from July 1, 2000.  Click2learn does not expect that the
adoption of FIN No. 44 will have a material effect on its financial
statements.

SEGMENT INFORMATION

         Click2learn has two primary segments: enterprise and electronic
commerce (e-commerce). The enterprise segment refers to the single source
solution designed for implementation on a customer's internal information system
using click2learn's products and services. In July 1999, click2learn launched
its e-commerce network. The electronic commerce segment did not exist prior to
1999. The click2learn.com network is an Internet based service for the delivery
and management of e-learning over the Internet including a portal and e-


                                       7
<PAGE>


commerce site. The accounting policies of the operating segments are the same
as those described in the summary of significant accounting policies. There
have been no transactions between segments.

REPORTABLE SEGMENT INFORMATION

<TABLE>
<CAPTION>
                                                            FOR THE THREE MONTHS ENDED
                                                                     MARCH 31,
                                                        ---------------------------------
                                                           2000                    1999
                                                        ----------             ----------
<S>                                                      <C>                     <C>
Revenue:

      Enterprise                                         $ 9,156                  $ 7,460
      Electronic commerce                                    727                        -
                                                        ----------             ----------
                                                         $ 9,883                  $ 7,460
                                                        ----------             ----------

Operating Loss:

      Enterprise                                         $  (817)                 $(2,646)
      Electronic commerce                                 (2,809)                       -
                                                        ----------             ----------
                                                         $(3,626)                 $(2,646)
                                                        ----------             ----------

</TABLE>


Capital expenditures, depreciation and amortization and total assets were not
significant for the electronic commerce business segment.

GEOGRAPHIC INFORMATION

<TABLE>
<CAPTION>
                                                                      FOR THE THREE MONTHS ENDED
                                                                              MARCH 31,
                                                                   ---------------------------------
                                                                      2000                  1999
                                                                   ----------             ----------
     <S>                                                             <C>                   <C>
     Revenue:

           Domestic                                                  $8,956                $5,904
           International - primarily Europe                             927                 1,557
                                                                   ----------             ----------
                                                                     $9,883                $7,460
                                                                   ----------             ----------
</TABLE>

Revenues are attributed to geographic areas based on the location of the
customers.

<TABLE>
<CAPTION>
                                                                      FOR THE THREE MONTHS ENDED
                                                                              MARCH 31,
                                                                   ---------------------------------
                                                                      2000                  1999
                                                                   ----------             ----------
     <S>                                                             <C>                   <C>

     Long-lived assets:
            Domestic operations                                      $11,341               $12,305
            International operations - primarily Europe                  109                    82
                                                                   ----------             ----------
                                                                     $11,451               $12,387
                                                                   ----------             ----------

</TABLE>

Long-lived assets represents property, plant and equipment and goodwill, net of
accumulated depreciation and amortization.

SUBSEQUENT EVENTS

         On April 17, 2000, click2learn entered an agreement with SOFTBANK Media
& Marketing Corporation and SOFTBANK Forums Japan, Inc. to form a joint venture,
Click2learn Japan K.K. Click2learn's interest in the joint venture is 40%. This
joint venture will introduce the click2learn.com network to the Japanese
market.



                                       8

<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF CLICK2LEARN SHOULD BE READ IN CONJUNCTION WITH CLICK2LEARN'S
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES THERETO INCLUDED
ELSEWHERE IN THIS REPORT. THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. CLICK2LEARN'S ACTUAL RESULTS MAY DIFFER
SIGNIFICANTLY FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.
FACTORS THAT MAY CAUSE SUCH A DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO, THOSE
DISCUSSED IN "FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS."

OVERVIEW

         Click2learn provides full service e-learning solutions to a wide
variety of businesses, government agencies and educational institutions.
Click2learn's e-learning solutions include the click2learn.com e-learning
network, a powerful outsourced platform for e-learning delivered by click2learn
as an application service provider (ASP), and a comprehensive e-learning
solution designed for implementation on a customer's internal information
systems.

         The click2learn.com e-learning network gives organizations access to
thousands of leading third party e-learning courses and allows them to publish
and distribute their own custom e-learning courses or other educational
materials through the use of click2learn's browser-based authoring and
publishing tools. In addition to the click2learn.com e-learning portal, the
click2learn.com e-learning network provides customers with secure
custom-configured e-learning sites that are hosted by click2learn as an ASP.
These custom-configured web sites can provide organizations secure sites for the
delivery and management of training for employees, suppliers, distributors and
customers. In addition, through the click2learn.com e-learning network's support
for e-commerce transactions, corporate customers and Internet portals can
develop an additional revenue source by selling their proprietary training
materials as well as content from the click2learn.com e-learning portal through
their configured sites. The click2learn.com e-learning network was formally
launched in the third quarter of 1999.

         In addition to its ASP solution, click2learn provides
internally-implemented enterprise e-learning solutions based on Ingenium, a
learning management and skills assessment system that enables customers to
deploy and manage all aspects of their learning activities and to assess the
skills and learning needs of their employees. The Ingenium system supports the
management and delivery of multiple types of learning activities within an
organization including instructor-led training, training delivered on CD-ROM or
e-learning courses delivered over an organization's intranet. The Ingenium
system also allows an organization to closely match and track all employees'
readiness to perform their job functions based on the analysis of the skills
required to accomplish any tasks.

         Click2learn's e-learning solutions are supported by one of the
industry's largest professional services groups, including custom content
development, strategic consulting and integration services, and by its
e-learning authoring products, featuring ToolBook II Instructor (for
professional developers) and ToolBook II Assistant (for subject matter experts).

         Revenues are derived from four categories: click2learn.com e-learning
network site fees and royalties, content sales, software licenses and
professional services. Click2learn.com e-learning network site fees or royalties
are determined by contracts with lengths of 1 to 3 years and vary depending on
the functionality provided or the commerce conducted through the site. Revenues
from functionality fees are generally recognized evenly over the life of the
contract, and revenues from royalties are recognized as earned. Revenues from
content sales are either spread evenly over the life of the contract for course
usage with respect to e-learning courses or are recognized when shipped for hard
goods and when delivered for instructor-led courses. Revenues from software
licenses generally are recognized upon shipment of products from click2learn's
warehouse. The enterprise e-learning products that fall under this category are
the Ingenium learning management system and the ToolBook II line of authoring
products. Professional service revenues are generally associated with fixed
price contracts or time and material contracts. Revenues from fixed price
contracts are recognized based on the percentage-of-completion method. Revenues
from time and material contracts are earned as the work is performed based on
the agreed upon rates.



                                       9
<PAGE>


         Costs of revenue from click2learn.com e-learning network content
consist of royalties or purchase payments to the developers or publishers of the
content. Cost of software license or product revenue includes costs of media,
manuals and distribution. Costs of services revenue consists primarily of
personnel-related costs in providing consulting, maintenance and training to
customers. Gross margin on product revenue is higher than gross margin on
services revenue, reflecting the lower materials, packaging and other costs of
software compared with the relatively high personnel costs associated with
providing professional services.

         Click2learn incurred net losses of $10.0 million and $3.3 million in
the three months ended March 31, 1999 and 2000, respectively, and has yet to
achieve operating income or net income under its new business model.
Click2learn's limited operating history under its current business model and
the emerging nature of the market for e-learning, among other factors, make
prediction of click2learn's future operating results difficult. Despite the
establishment of the click2learn.com e-learning network, which is based on an
unproven business model, click2learn expects to continue to derive the
majority of its revenues from enterprise e-learning products and services for
at least the next 12 months.

         Although click2learn has experienced revenue growth in certain recent
periods and although the financial statements herein also reflect revenue growth
in certain periods, there can be no assurance that such growth rates are
sustainable or indicative of actual growth rates that click2learn may experience
and, therefore, they should not be considered indicative of future operating
results. In addition, click2learn intends to continue to invest in the
click2learn.com e-learning network, its professional services business, and
research and development, among other things. As a result, click2learn expects
to continue to incur annual operating losses at least through 2000. There can be
no assurance that click2learn will achieve profitability or, if profitability is
achieved, that it will be sustained.


RESULTS OF OPERATIONS

         The following table presents click2learn's results of operations as a
percentage of total revenue for the periods indicated.

<TABLE>
<CAPTION>
                                                     Three Months
                                                    Ended March31,
                                             --------------------------
                                                  2000          1999
                                             ------------    ----------
                                             ------------    ----------
                                                   %              %
                                             ------------    ----------
<S>                                             <C>             <C>

Revenue:
 Product revenue:
   Enterprise  products                           37.7            36.7
   Other products                                  0.7             5.6
                                             ---------        --------
        Total product revenue                     38.4            42.3
Enterprise services revenue                       54.3            57.7
E-learning network                                 7.3               -
                                             ---------        --------
         Total revenue                           100.0           100.0
Cost of revenue:
 Product revenue:
   Enterprise products                             2.4             2.4
   Other products                                  0.3             1.8
                                             ---------        --------
         Total cost of product revenue             2.7             4.2
 Enterprise services                              39.5            43.9
 E-learning network                                6.7               -
                                             ---------        --------
         Total cost of revenue                    48.9            48.1
Gross margin                                      51.1            51.9
Operating expenses:
    Research and development                      24.8            20.3
    Sales and marketing                           45.9            47.3
    General and administrative                    14.7            16.8
   Amortization of goodwill                        2.4             2.9



                                       10
<PAGE>

<S>                                             <C>             <C>
                                             ---------        --------
         Total operating expenses                 87.8            87.3
                                             ---------        --------
Loss from operations                            (36.7)          (35.4)
                                             ---------        --------
Other income(loss), net                           2.8             3.2
                                             ---------        --------
Net loss                                        (33.9)          (32.2)
                                             =========        ========

</TABLE>


THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999

         REVENUE. Total revenue increased 32% from $7.5 million in the three
months ended March 31, 1999 to $9.9 million in the three months ended March 31,
2000.

         Enterprise product revenue increased 36% from $2.7 million in the
three months ended March 31, 1999 to $3.7 million in the three months ended
March 31, 2000. The increase in enterprise product revenue was due primarily to
increased demand for click2learn's enterprise products (Ingenium and the
ToolBook II product line). Other product revenue decreased 83% from $418,000 in
the three months ended March 31, 1999 to $70,000 in the three months ended
March 31, 2000. Other product revenue consists of revenue from click2learn's
products that are not targeted at the e-learning market, all of which have
been discontinued. Click2learn does not anticipate receiving significant
revenues from its other products in the future. Total product revenue increased
20% from $3.2 million in the three months ended March 31, 1999 to $3.8 million
in the three months ended March 31, 2000, reflecting the increase in enterprise
product revenue.

         Enterprise services revenue increased 25% from $4.3 million in the
three months ended March 31, 1999 to $5.4 million in the three months ended
March 31, 2000. The change was due to increased demand and larger sized
projects.

         Revenues from the click2learn.com e-learning network were $727,000 in
the three months ended March 31, 2000. Because the click2learn.com e-learning
network was not launched until the third quarter of 1999, there were no
e-learning network revenues in the three months ended March 31, 1999. E-learning
network revenue consists of revenues from site fees and royalties received by
click2learn, sales of content through the click2learn.com e-learning network,
and professional services related to the click2learn.com e-learning network.

         COST OF REVENUE. Cost of enterprise product revenue includes costs of
media, manuals and distribution costs. Cost of enterprise services revenue
consists primarily of personnel-related costs in providing consulting, custom
development, integration, technical support and training to customers. Cost of
e-learning network revenue consists of royalties to third party content
providers, guaranteed royalties to certain portal partners, and personnel-
related costs in providing consulting and services. Gross margin on product
revenue is higher than gross margin on services or the e-learning network
revenue, reflecting the lower materials, packaging and other costs of software
compared with the personnel costs associated with providing professional
services and the royalties to third party content that is resold on the
e-learning network.

         Total cost of revenue increased 35% from $3.6 million in the three
months ended March 31, 1999 to $4.8 million in the three months ended March 31,
2000. This increase is approximately the same as the associated increase in
total revenue.

         Cost of enterprise e-learning product revenue increased 35% from
$178,000 in the three months ended March 31, 1999 to $240,000 in the three
months ended March 31, 2000. The increase was due primarily to increased sales
of enterprise e-learning products. Cost of other products revenue decreased 79%
from $136,000 in the three months ended March 31, 1999 to $28,000 in the three
months ended March 31, 2000. Total cost of product revenue decreased 15% from
$314,000 in the three months ended March 31, 1999 to $268,000 in the three
months ended March 31, 2000. The decrease was primarily due to the decrease in
sales of other products, which have a higher cost of revenue than enterprise
e-learning products.

         Total products gross margin increased from 90% in the three months
ended March 31, 1999 to 93% in the three months ended March 31, 2000.

         Cost of enterprise services revenue increased 19% from $3.3 million in
the three months ended March 31, 1999 to $3.9 million in the three months ended
March 31, 2000. The increase was due primarily to the increased


                                      11
<PAGE>

personnel costs to staff the increased volume of services projects being
performed during the three months. Click2learn anticipates that cost of
services revenue will increase in absolute dollars if revenues continue to
increase.

         Enterprise services gross margin increased from 24% in the three months
ended March 31, 1999 to 27% in the three months ended March 31, 2000.

         Cost of e-learning network revenue was $667,000 in the three months
ended March 31, 2000. Cost of e-learning network revenues consists of royalties
payable to content publishers or developers for content sold through the
click2learn.com e-learning network, royalties payable to corporate customers or
Internet portals with respect to content sold through their e-learning sites,
and personnel costs for professional services related to the click2learn.com
e-learning network.

         E-learning network gross margin was 8% for the three months ended March
31, 2000, reflecting the front-end costs involved in setting up e-learning sites
as well as guaranteed royalties to certain portal sites.

         Total gross margin remained unchanged at 51% for the three months ended
March 31, 1999 and 2000. To the extent services revenue increases relative to
product sales revenue as a percentage of total revenue, overall gross margins
would decline.


OPERATING EXPENSES

         RESEARCH AND DEVELOPMENT. Research and development expenses include
expenses associated with the development of new products, product versions and
the infrastructure related to the e-learning network and consist primarily of
salaries, depreciation of development equipment, supplies and overhead
allocations. Research and development expenses increased 62% from $1.5 million
in the three months ended March 31, 1999 to $2.5 million the three months ended
March 31, 2000. Research and development expenses as a percentage of total
revenue increased from 20% in the three months ended March 31, 1999 to 25% in
the three months ended March 31, 2000. The increase was attributable to
incremental expenses associated with developing the e-learning network.
Click2learn expects research and development expenses to increase in absolute
dollars in the future.

         SALES AND MARKETING. Sales and marketing expenses consist primarily of
sales and marketing personnel costs, including sales commissions, travel,
advertising, public relations, seminars, trade shows and other marketing
literature and overhead allocations. Sales and marketing expenses increased 29%
from $3.5 million in the three months ended March 31, 1999 to $4.5 million in
the three months ended March 31, 2000. Sales and marketing expenses as a
percentage of total revenue decreased from 47% in the three months ended March
31, 1999 to 46% in the three months ended March 31, 2000. The increase in sales
and marketing expense was attributable to increases in the size of click2learn's
direct selling organization. Click2learn expects that sales and marketing
expenses will increase in absolute dollars in the future, as click2learn
continues to increase its sales and marketing efforts, particularly in
connection with the click2learn.com e-learning network.

         GENERAL AND ADMINISTRATIVE. General and administrative expenses consist
primarily of salaries and other personnel-related expenses for click2learn's
administrative, executive and finance personnel as well as outside legal and
audit costs. General and administrative expenses increased 15% from $1.3 million
for the three months ended March 31, 1999 to $1.4 million for the three months
ended March 31, 2000. General and administrative expenses as a percentage of
total revenue decreased from 17% for the three months ended March 31, 1999 to
15% for the three months ended March 31, 2000.

AMORTIZATION OF GOODWILL

         Amortization of goodwill expense relates to the amortization of excess
purchase price over net assets from acquired companies recorded under the
purchase method of accounting. For the three months ended March 31, 1999,
click2learn recognized $219,000 of amortization of goodwill and for the three
months ended March 31, 2000, recognized $236,000 of amortization of goodwill.



                                       12

<PAGE>

OTHER INCOME

         Click2learn recorded no other expense in the three months ended March
31, 1999 or in the three months ended March 31, 2000. Other interest income, net
was $240,000 in the three months ended March 31, 1999 and $277,000 in the three
months ended March 31, 2000. The increase was due to interest earned on
click2learn's higher cash and cash equivalents balance as a result of financing
activities during 1999.

LIQUIDITY AND CAPITAL RESOURCES

         At March 31, 2000, click2learn had cash and cash equivalents totaling
$19.2 million, an increase of $369,000 from March 31, 1999. The increase in cash
was due primarily to financing activities during 1999. At March 31, 2000, the
principal source of liquidity for click2learn was $27.3 million of working
capital.

         Click2learn anticipates that its cash and cash equivalents will be
sufficient to meet its working capital needs and capital expenditures for at
least the next 12 months. Click2learn's long-term liquidity will be affected by
numerous factors, including acquisitions of businesses or technologies, demand
for click2learn's e-learning products and services, the extent to which
such e-learning products and services achieve market acceptance, the timing
and extent to which click2learn invests in new technology, the expenses of sales
and marketing and new product development, the extent to which competitors are
successful in developing their own products and services and increasing their
own market share, the level and timing of revenues and other factors.
Click2learn from time to time evaluates potential acquisitions of businesses,
products or technologies that complement click2learn's business. To the extent
that resources are insufficient to fund click2learn's activities, click2learn
may need to raise additional funds. Such additional funding, if needed, may not
be available on terms attractive to click2learn, or at all. If adequate funds
are not available on acceptable terms, click2learn may be unable to expand its
business, develop or enhance its products and services, take advantage of
future opportunities or respond to competitive pressures, any of which could
have a material adverse effect on click2learn's business, operating results
and financial condition.

YEAR 2000 COMPLIANCE

         To date, click2learn has not experienced any material year 2000 related
problems with its software or third-party software or computer systems.

FACTORS THAT MAY AFFECT FUTURE RESULTS OF OPERATIONS

         CLICK2LEARN HAS A LIMITED OPERATING HISTORY IN ITS CURRENT MARKETS.
Until early 1995, click2learn was engaged in various research and development
activities and in developing and marketing multimedia authoring products,
database and Internet tools, web publishing products and other ancillary
products, most of which click2learn does not currently sell. Starting in 1995,
click2learn began to focus its development and marketing efforts on products and
services for the enterprise learning market. Click2learn announced the
click2learn.com e-learning network in July 1999, and has not previously hosted,
operated and managed e-commerce web sites. Accordingly, click2learn has a
limited operating history on which to evaluate its current business and
prospects.

         Risks click2learn faces under its new business model include, but are
not limited to, the demand for technology-based training and e-learning
applications, demand for e-learning products and services, broad and timely
acceptance of the click2learn.com e-learning network, competition and those
other risks described in this section. To address these risks, click2learn must,
among other things:

         -        successfully introduce and build the click2learn.com
                  e-learning network and attract user traffic to the e-learning
                  network;
         -        establish corporate e-learning sites for its customers and
                  generate revenues from such customers;
         -        continue to establish relationships with leading providers of
                  learning content to sell that content through the
                  click2learn.com e-learning network;
         -        continue to establish co-branded e-learning sites for Internet
                  portals and corporate customers for the use of click2learn.com
                  as the "learning channel" for their web sites;
         -        respond to competitive developments;
         -        attract, integrate, retain and motivate qualified personnel;

                                       13
<PAGE>


         -        successfully introduce new products and services; and
         -        address and establish new technologies and technology
                  standards.

         Although click2learn intends to derive revenue from the click2learn.com
e-learning network, the pricing, expense and revenue model for the
click2learn.com e-learning network has not been broadly tested in the
marketplace. If the pricing, expense and revenue model is not acceptable to
users, customers, content providers or advertisers, the click2learn.com
e-learning network may not be commercially successful. This would seriously harm
click2learn's business, particularly if it experiences a decline in the growth
of revenues from its enterprise e-learning products and services. Click2learn
expects to continue to derive the majority of its revenues over at least the
next 12 months from its enterprise e-learning products, rather than the
click2learn.com e-learning network.

         CLICK2LEARN'S OPERATING RESULTS COULD VARY SIGNIFICANTLY FROM QUARTER
TO QUARTER. Click2learn's quarterly operating results have varied significantly
in the past and are expected to fluctuate significantly in the future as a
result of a variety of factors, many of which are outside click2learn's control.
Factors that may adversely affect click2learn's quarterly operating results
include:
         -        the demand for technology-based training and demand for
                  e-learning solutions;
         -        the size and timing of product orders and the timing and
                  execution of professional services engagements;
         -        the mix of revenue from products and services;
         -        the mix of products sold;
         -        the ability to meet client project milestones;
         -        market acceptance of click2learn's or its competitors'
                  products and services;
         -        click2learn's ability to develop and market new or enhanced
                  products and services in a timely manner and the market
                  acceptance of these products and services;
         -        timing of revenues and expenses relating to the
                  click2learn.com e-learning network; and
         -        the timing of revenue recognition.

         Click2learn's future revenues are difficult to predict and click2learn
may not be able to adjust spending in response to revenue shortfalls.
Click2learn's limited operating history under its current business model,
including the click2learn.com e-learning network, possible acquisitions and the
emerging nature of the market make prediction of future revenue and expenses
difficult. Expense levels are based, in part, on expectations as to future
revenue and to a large extent are fixed in the short term. If click2learn is not
able to predict future revenue accurately, it may be unable to adjust spending
in a timely manner to compensate for any unexpected revenue shortfall.

         CLICK2LEARN IS IN A DEVELOPING MARKET. The e-learning market is in the
early stages of development. Corporate training and education has historically
been conducted primarily through classroom instruction and has traditionally
been performed by a company's internal personnel. Many companies have invested
heavily in their current training solutions. Although technology-based training
applications have been available for several years, they currently account for
only a small portion of the overall training market. Accordingly, the future
success of click2learn will depend upon, among other factors, the extent to
which companies adopt technology-based solutions and use the Internet in
connection with their training activities and the extent to which companies
utilize the services or purchase products of third-party providers, and more
particularly whether companies adopt solutions delivered over the Internet on an
application service provider basis, including private e-learning sites hosted by
third parties such as those on the click2learn.com e-learning network. Many
companies that have already invested substantial resources in traditional
methods of corporate training may be reluctant to adopt a new strategy that may
limit or compete with their existing investments. Even if companies implement
technology-based training or e-learning solutions, they may still choose to
design, develop, deliver or manage all or a part of their education and training
internally. If technology-based learning and the use of the Internet for
learning do not become widespread, or if companies do not use the products and
services of third parties to develop, deliver or manage their training needs,
then click2learn's products and services, including the click2learn.com
e-learning network, may not achieve commercial success.

         CLICK2LEARN DEPENDS ON INCREASING USE OF THE INTERNET. The
click2learn.com e-learning network depends on the increased acceptance and use
of the Internet, both generally and as a means for the purchase and delivery of
learning content. Rapid growth in the use of the Internet is a recent
phenomenon. As a result, acceptance and use



                                       14
<PAGE>


may not continue to develop at historical rates and a sufficiently broad base
of business customers or consumers may not adopt or continue to use the
Internet, particularly for training and education. Demand and market acceptance
for recently introduced services and products over the Internet are subject to
a high level of uncertainty, and there exist few proven services and products.

         Click2learn's business would be seriously harmed if:

         -        use of the Internet and other online services does not
                  continue to increase or increases more slowly than expected;
         -        the technology underlying the Internet and other online
                  services does not effectively support any expansion that may
                  occur;
         -        the Internet and other online services do not create a viable
                  commercial marketplace, reducing the need for our services;
         -        the necessary communication and computer network technology
                  for the Internet does not continue to develop; or
         -        governmental regulation of the Internet increases.

         INTERNET SECURITY RISKS. A significant barrier to the widespread use of
the Internet for applications such as training and education is the secure
transmission of confidential information over public networks. Advances in
computer capabilities, new discoveries in the field of cryptography or other
events or developments could result in compromises or breaches of click2learn's
security systems or those of other web sites. If any well-publicized security
breach were to occur, the Internet may not become widely accepted for commerce
and communications. Anyone who circumvents click2learn's security measures could
misappropriate proprietary information or cause interruptions in our services or
operations.

         The Internet is a public network, and data is sent over this network
from many sources. In the past, computer viruses, software programs that disable
or impair computers, have been distributed and have rapidly spread over the
Internet. Computer viruses could be introduced into our systems or those of our
customers or content providers, which could disrupt the click2learn.com
e-learning network or make it inaccessible to users. We may be required to
expend significant capital and other resources to protect against the threat of
security breaches or to alleviate problems caused by breaches. To the extent
that our activities may involve the storage and transmission of proprietary
information, such as personal information or credit card numbers, security
breaches could expose us to a risk of loss or litigation and possible liability.

         POSSIBILITY OF PERFORMANCE PROBLEMS. The click2learn.com e-learning
network has only been recently introduced. If the volume of traffic or content
on the click2learn.com e-learning network increases, the network may experience
slower response times or other problems. In addition, both click2learn and users
depend on Internet service providers, telecommunications companies and the
efficient operation of their computer networks and other computer equipment for
the operation of and access to the click2learn.com e-learning network. Each of
these has experienced significant outages in the past and could experience
outages, delays and other difficulties due to system failures unrelated to
click2learn's systems. Any delays in response time or performance problems
resulting from these unrelated systems could cause users to believe the
click2learn.com e-learning network is not functioning properly and therefore not
use the click2learn.com e-learning network for their training needs.

          COMPETITION. The e-learning market is highly fragmented and
competitive, rapidly evolving and subject to rapid technological change, with no
single competitor accounting for a dominant market share. Because of the lack of
significant barriers to entry in its market, click2learn expects that new
competitors will enter this market in the future. Click2learn's competitors vary
in size and scope and the breadth of products and services offered. Click2learn
faces competition from:

         -        other web sites focused on learning and education, such as
                  smartforce.com, with respect to the click2learn.com e-learning
                  network, as well developers or resellers of training content
                  who make their content available over the Internet;
         -        other developers of enterprise learning management systems,
                  such as Saba and Docent, as well as publishers of e-learning
                  courses that sell management systems with their titles with
                  respect to its Ingenium learning management system;
         -        developers of multimedia authoring tools with respect to its
                  ToolBook II authoring products;



                                       15
<PAGE>


         -        many small, regional e-learning and technology-based training
                  services businesses; and
         -        large professional consulting firms and in-house training
                  departments, with respect to all aspects of its enterprise
                  learning solutions.

         Several of click2learn's current and potential competitors have longer
operating histories and significantly greater financial, technical, marketing
and other resources and therefore may be able to respond more quickly to new or
changing opportunities, technologies, standards and customer requirements. Many
of these competitors also have broader and more established distribution
channels that may be used to establish strategic alliances or deliver competing
products or services directly to customers. If these competitors were to bundle
competing products or services with the products and services of their strategic
partners, the demand for click2learn's products and services might be
substantially reduced and its ability to market and sell products and services
successfully may be substantially diminished. In addition, the existence or
announcement of strategic relationships involving click2learn's competitors
could adversely affect its ability to attract and retain customers.

         DEPENDENCE ON THIRD PARTY TECHNOLOGY AND CONTENT. Click2learn uses
licensed third party technology in its products and in the click2learn.com
e-learning network and it licenses content from third parties for the
click2learn.com e-learning network. Click2learn may not be able to continue to
license technology or content from third parties. Future licenses to this
technology and content may not be available to click2learn on commercially
reasonable terms or at all. The loss of or inability to obtain or maintain any
of these technology or content licenses could result in delays in the
introduction of new products or could force click2learn to discontinue
permitting access to portions of the click2learn.com e-learning network until
equivalent technology or content, if available, is identified, licensed and
integrated. Furthermore, although it has taken steps to protect itself in the
relevant license agreements, click2learn may be subjected to legal claims
related to licensed technology or content based on defamation, negligence,
product liability, infringement of intellectual property or other legal
theories.

         CUSTOMER REQUIREMENTS AND FIXED PRICE ENGAGEMENTS. Click2learn could
face liability from customers if it does not meet their expectations. Many of
click2learn's professional services engagements require it to develop e-learning
applications to suit unique customer requirements. The failure or inability to
meet a customer's expectations or requirements in the performance of services
could injure click2learn's business reputation or result in a claim for damages,
regardless of click2learn's responsibility for the failure. Click2learn attempts
to limit contractually its liability for damages arising from product defects,
negligent acts, errors, mistakes or omissions in rendering professional
services. However, these contractual protections are not always obtained and may
not be enforced or otherwise protect click2learn from liability for damages.
Click2learn's insurance may not be sufficient to cover one or more claims.

         Many professional services projects are performed on a fixed-price
basis rather than on a time and materials basis. If click2learn does not
accurately predict the costs of these projects, it could incur unexpected costs.
If click2learn does not complete fixed-price engagements within budget, on time
and to clients' satisfaction, click2learn would bear the risk of cost overruns.

         SOFTWARE DEFECTS. Software products frequently contain errors or
failures, especially when first introduced or when new versions are released.
Click2learn has in the past discovered errors in its products and those of third
parties after their initial release. Because click2learn's enterprise e-learning
products are complex products targeted for enterprise customers in an emerging
market, customers and potential customers may have a greater sensitivity to
product defects than the market for software products generally. Product defects
could result in loss of revenue or delay in market acceptance, diversion of
development resources, damage to our reputation, or increased service and
warranty costs.

         KEY PERSONNEL. Click2learn's future success depends on the performance
of the senior management team and other key employees, and on its ability to
attract, integrate, motivate and retain additional highly skilled technical,
sales and marketing, and professional services personnel. There is intense
competition for these personnel. Click2learn does not have employment agreements
with most of its executives or other key employees. In addition, click2learn
does not maintain key person life insurance for any officers or key employees.

         INTELLECTUAL PROPERTY. Despite click2learn's precautions, it may be
possible for a third party to copy or otherwise obtain and use its intellectual
property or trade secrets without authorization. In addition, others could
independently develop substantially equivalent intellectual property. Litigation
may be necessary in the future to



                                       16
<PAGE>


enforce click2learn's intellectual property rights, to protect trade secrets or
to determine the validity and scope of the proprietary rights of others. This
litigation could result in substantial costs and diversion of management and
technical resources.

         From time to time click2learn has received, and may in the future
receive, notice of claims of infringement of other parties' proprietary rights.
Infringement or other claims could be asserted or prosecuted against click2learn
in the future. Any such claims, with or without merit, could be time-consuming,
and result in costly litigation and diversion of technical and management
personnel. They could also cause product shipment delays or require click2learn
to develop non-infringing technology or enter into royalty or licensing
agreements. These royalty or licensing agreements, if required, may not be
available on reasonable terms, or at all.

         GENERAL ECONOMIC CONDITIONS. Click2learn's revenues are subject to
fluctuation as a result of general economic conditions. A significant portion of
click2learn's revenues are derived from the sale of products and services to
Fortune 1000 companies or government agencies, which historically have adjusted
their expenditures for education and training during economic downturns. Should
the economy weaken in any future period, these organizations may not increase or
may reduce their expenditures on education and training, which could have an
adverse effect on click2learn's business.


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Click2learn holds its assets primarily in cash and cash equivalents,
such as short-term marketable debt securities, money market funds and other cash
equivalents. Click2learn minimizes its risk by investing in financial
instruments with a maturity of typically three months or less. Click2learn does
not use derivative financial instruments.



                                       17


<PAGE>


PART II--OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         Not applicable.

ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS

         In connection with click2learn's initial public offering, it registered
for public sale 3,000,000 shares of common stock, all of which were sold by
click2learn. The Registration Statement on Form S-1 (Registration No.
333-49037), as amended, was declared effective by the Securities and Exchange
Commission on June 11, 1998. NationsBanc Montgomery Securities LLC was the
managing underwriter of the IPO. The IPO commenced on June 12, 1998, and
terminated following the sale of all of the securities registered under the
Registration Statement, plus an additional 25,000 shares pursuant to the
exercise of the underwriters' over-allotment option. The common stock was
offered and sold to the public at $11.00 per share, for aggregate consideration
of $33,275,000, of which click2learn received net proceeds of $29,331,000.

         From the effective date of the Registration Statement through December
31, 1999, click2learn incurred an estimated $3,944,000 in expenses for
click2learn's account in connection with the issuance and distribution of the
common stock, including underwriting discounts and commissions of $2,329,250 and
other expenses of $1,614,750. No finders' fees or expenses were paid to or for
the underwriters. None of these payments were made, directly or indirectly, to:
(1) directors or officers of click2learn, or their associates; (2) persons
owning ten percent or more of any class of equity securities of click2learn; or
(3) affiliates of click2learn.  No such expenses have been incurred after
December 31, 1999.

         From the effective date of the Registration Statement through December
31, 1999, click2learn applied all of the offering proceeds, net of expenses, to
working capital requirements. None of these payments were made outside of
normal operating expenses, directly or indirectly, to: (1) directors or
officers of click2learn, or their associates; (2) persons owning ten percent or
more of any class of equity securities of click2learn; or (3) affiliates of
click2learn. Click2learn believes that all of the offering proceeds have been
used in a manner consistent with the use of proceeds described in the
Registration Statement.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         Not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

         Not applicable.

ITEM 5.  OTHER INFORMATION

         On January 19, 2000, click2learn promoted then-current President Kevin
Oakes to the position of President and Chief Executive Officer. Mr. Oakes had
served as President since September 1997. Mr. Oakes will continue to serve on
click2learn's board of directors. Also on January 19, 2000, James A. Billmaier,
who was then CEO, became the Vice Chairman of click2learn. Mr. Billmaier remains
on the board of directors. At the same time, Steve Martino, who has held various
executive positions with click2learn since 1995, was promoted to Chief Operating
Officer.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>

         (a)      Exhibits.
                 ----------
                  <S>      <C>


                                       18
<PAGE>


                  10.01    Employment Agreement dated January 19, 2000, between
                           click2learn and Kevin Oakes

                  10.02    Directed Engineering Agreement, dated May 3, 1999,
                           between click2learn and Vulcan Northwest, Inc.

                  27.01    Financial Data Schedule

</TABLE>


         (b)      Reports on Form 8-K.

                  No reports on Form 8-K were filed during the three months
                  ended March 31, 2000.



                                       19
<PAGE>


SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.



                                 CLICK2LEARN.COM, INC.



          May 15, 2000                        /s/ John D. Atherly
         --------------           ---------------------------------------------
              Date                              John D. Atherly
                                   Vice President, Finance and Administration
                                          and Chief Financial Officer
                                 (Duly Authorized Officer and Chief Accounting
                                                    Officer)



                                       20
<PAGE>


<TABLE>
<CAPTION>

                             EXHIBIT INDEX
                            ---------------

                  <S>      <C>

                  10.01    Employment Agreement dated January 19, 2000, between
                           click2learn and Kevin Oakes

                  10.02    Directed Engineering Agreement, dated May 3, 1999,
                           between click2learn and Vulcan Northwest, Inc.

                  27.01    Financial Data Schedule

</TABLE>

                                      21